Happy New Year, Microsoft. Now, get to work! That's the holiday
message from research firm Directions on Microsoft to the world's
largest software vendor.

The research firm, many of whose analysts are former Microsoft
product managers, took the software vendor to task with a list of
the top ten challenges the company needs to meet in 2006.

Job No. 1: Get Vista into the boardroom. Directions on Microsoft
said that while Vista's cool graphical effects might impress
consumers, they could turn off more IT admins than they attract.
Meanwhile, sales of Software Assurance prepaid upgrade agreements
were disappointing.

"The Windows Client division has to tell corporate customers why
they want Windows Vista, and why they shouldn't wait until they buy
new hardware," wrote Rob Helm, director of research.

Then there's job No. 2, something that Microsoft can't seem to
cross off its to-do list: Application security and reliability.

"Microsoft has always offered guidelines for how to develop
secure, reliable applications on Windows, but the company rarely had
the discipline to enforce them, even with its own applications," the
analysts wrote.

Ouch!

Microsoft should publish a definitive set of guidelines for
software developers, they said, and enforce those guidelines
internally -- even against its own developers.

Third, the company should lay its cards on the table about its
plans for its "managed solutions" hosted software initiative, so
that systems integrator partners, some of whom move thousands of
units of Windows, Office and server products, know how much business
Redmond will leave on the table for them.

"Microsoft needs to map out where its managed solutions effort is
going, how it will differ from what partners are doing today, and
how it will kick-start financial growth," wrote Directions analyst
Paul DeGroot.

Next, Redmond better get cracking on developer tools for Windows
Vista. Directions on Microsoft gave the company high marks for its
developer tools and support programs, but noted that time is short
to produce the next generation of basic tools to support some of the
new functionality of Vista, expected to ship in the second half of
2006, such as the Web services framework.

Fifth, the analysts said Microsoft's online strategy needs still
another extreme makeover.

"Microsoft’s latest online strategy is to match Google’s every
move in hopes of raking in more advertising dollars, while taking
yet another stab at subscription services. 2005 saw a lot of motion
-- leaked memos, blog buzz, reorgs, and a new 'Live' brand -- but
little progress in terms of service improvements, audience share, or
dollars," wrote analyst Matt Rosoff.

But wait, there's more.

Microsoft's business solutions line of business has been renamed
Dynamics, but it's still disorganized. Whoever replaces current
division leader Doug Burgum will have to map out how the product
line will come together into something consistent for partners to
support and sell, and detail how existing customers will transition
to the new world.

No. 7 on the to-do list is to turn Microsoft's Dynamic Systems
Initiative (DSI) for managing software from vision to reality, the
analysts said.

"The Dynamic Systems Initiative could significantly improve the
availability of critical systems and establish a new standard for
software that is built from the ground up to be monitored and
managed efficiently," wrote analyst Peter Pawlak. This is
potentially one of Microsoft’s strongest competitive assets: no
other vendor (nor the open source community) has such a broad range
of software under one roof, and thus the ability to design it to
work together."

But so far, he added, critical pieces of DSI are still
"vaporware," as are the tools corporate developers will need to
produce manageable applications.

Next, if it's too much to ask the company to lay out product
roadmaps, the analysts said, in 2006 it should at least clarify its
policies. For example, the company could state whether the Windows
client operating system will be consistently released with
alternating major and minor releases, as was proposed for Windows
Server.

"Too often," wrote analyst Michael Cherry, "customers have to
make critical business decisions with incomplete knowledge of when
Microsoft will ship the next release, and making a mistake has major
financial implications with all of the risk assumed by the customer.
I'd like to see some signs of release discipline breaking out in
2006."

Then, there's the "Xbox 360 Final Death Match Challenge."
Microsoft promised that the Xbox business would become profitable by
fiscal year 2007, which Directions on Microsoft pointed out begins
in July 2006.

While the game console has seen strong uptake from game
publishers and consumers, Rosoff said, Microsoft has to come up with
the "must have" game title that was missing at launch, and prove
that early shortages and glitches are temporary and solvable
problems.

DeGroot saw real progress in 2005, with better documentation,
better software maintenance benefits and better use of the Web for
product use rights, pricing, and other product data. But he said the
current subscription model probably wouldn't take the company where
it needs to go in terms of maintenance and service revenue.

And then there are the ongoing antitrust woes, such as
Wednesday's ruling by the Korea Fair Trade Commission that Microsoft
abused its monopoly position by bundling Windows Media Player and
MSN Messenger with Windows. Oh, wait. That would make eleven
challenges. Never mind.